Wednesday, December 23, 2009

How Wall Street Bought Barney Frank

Barney Frank takes pride in being the Left's darling, but he's almost entirely funded by Wall Street and his votes show it.

Few members of Congress are considered more liberal than Barney Frank. Gay, left-handed, and Jewish, as his biography’s title proudly proclaims, he clearly enjoys living in direct contravention of right-wing ideals.

A favorite conservative punching bag, Glenn Beck and Bill O’Reilly have their tea party base convinced that it was actually Frank who sent the country into an economic tailspin, through some curious combination of incompetence, redistributive zeal, greed, and homosexuality. Beck’s conspiratorial chalkboards link Frank to the mortgage giants Fannie Mae and Freddie Mac, back to the community organization ACORN, and by implication, to the poor and undeserving. Naturally, liberals have responded by closing ranks around the congressman.

The pseudo-research of Fox News and friends, and their obsession with Fannie and Freddie -- hardly the root of all economic troubles -- have distracted from a core reality of Frank’s recent career in Congress. Since becoming the ranking Democrat on the House Financial Services Committee seven years ago, he has built a formidable Wall Street donor base, even by Washington’s standards; as the housing bubble grew, so too did his fundraising purse and his stature, in Congress and beyond.

In the course of this Wall Street-fueled fundraising blitz, Frank developed a web of relationships, alliances, and attachments to financial elites that have repeatedly undermined his independence on everything from bailout negotiations to the financial reform legislation that he recently shepherded through the House. And his friends in finance continue to extend -- and collect on -- their investment.

Frank on 'FIRE'

On one day in late July of this year, the Weiss family of Brookline, Mass. gave a whopping $24,000 to Barney Frank. He received maximum contributions of $4,800 each from Kara, an MFA student in Seattle; Judith, an undergraduate at UC Davis; Danielle, a psychology PhD at Tulane; and their parents, Bonnie and Andrew. (All campaign finance data is drawn from OpenSecrets.org and LittleSis.org.)

The Weiss daughters, who had previously given a grand total of two $250 contributions, would seem to be unlikely top contributors to Frank. But their father Andrew is a hedge fund manager, and therefore a key constituent of the powerful chairman of the House Financial Services committee.

Joining the Weiss family in funneling Wall Street dollars to Frank that day were two other hedge fund managers, Eric Vincent and Michael Inserra, and former Republican Congressman Richard Baker. Baker is president of the Managed Funds Association (MFA) -- the hedge fund industry’s main lobby -- and Inserra and Vincent are both board members.

Baker had testified before Frank’s committee just ten days earlier on the financial reform package snaking its way through the House. The MFA PAC cut Frank a $10,000 check a few days after the testimony.

By the time the House of Representatives passed financial reform legislation on Dec. 10, the bill reflected one of the hedge fund industry’s main asks -- lax oversight of the financial instruments known as over-the-counter (OTC) derivatives. After the bill passed, financial analyst Chris Whalen told Bloomberg News that “the OTC reform has gotten to be basically irrelevant as far as change… compared with what we thought we were going to get over the summer, it’s night and day.”

Meanwhile, Frank supported Wall Street and the hedge funds on at least two points where they lost out. He opposed an amendment offered by Brad Sherman that forces hedge funds to pay into a systemic risk fund; it passed with the overwhelming support of the committee, 52-17. A bipartisan measure to audit the Federal Reserve also passed without Frank’s support.

The final bill was barely out of the House before Frank was on CNBC, claiming victory but cautioning that the Fed provision -- the most celebrated populist measure in the bill -- threatened the institution’s “independence.”